House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)

Improving efficiency and data quality in the superannuation system

Outline of chapter

6.1 Schedule 4 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Retirement Savings Accounts Act 1997 (RSA Act) to improve the quality of information in the superannuation system, and facilitate fully effective e-commerce.

6.2 The Commissioner of Taxation (Commissioner) will keep a register containing information provided by certain superannuation funds, schemes and Retirement Savings Account (RSA) providers. The information contained on the register will enable superannuation entities, RSA providers and employers to transmit information and payments electronically.

6.3 The Commissioner may require information from an employer for the purpose of determining the employer's compliance with the superannuation data and payment regulations and standards. The Commissioner may also access the employer's premises for the purposes of inspecting records where the employer's consent has been received.

6.4 The Commissioner will be able to provide a tax file number that has been quoted by a member to a superannuation fund to other superannuation funds and/or RSA providers the member holds accounts with and who do not hold a record of the member's tax file number.

6.5 Trustees of eligible superannuation entities, regulated exempt public sector superannuation schemes and RSA providers may check a member's tax file number with the Commissioner for the purpose of ensuring accurate information is recorded within the superannuation system.

6.6 Employers may check an employee's tax file number with the Commissioner for the purpose of ensuring accurate information is recorded within the superannuation system.

Context of amendments

6.7 As part of the Government's Stronger Super package of reforms, a number of measures were announced to improve the efficiency of the superannuation system.

6.8 These measures included the introduction of mandatory superannuation data and payment regulations and standards for eligible superannuation entities, RSA providers and employers.

6.9 Facilitating efficient electronic superannuation transactions is dependent on:

•

improving the quality of superannuation data; and

•

availability of superannuation fund details that enable data and payments to be sent electronically.

6.10 It has been estimated that the Australian superannuation industry processes more than 100 million transactions annually. The potential gains to the system from improved efficiency in contribution management are significant.

6.11 A pre-condition to the establishment of a framework that supports effective electronic superannuation transactions is the availability of a register that contains details of the electronic identity of certain superannuation entities and RSA providers. By obtaining these details, superannuation entities, RSA providers and employers will be able to ensure superannuation data and payments reach the correct destination fund.

6.12 Currently poor member information quality leads to difficulties in allocating contributions, unnecessary duplicate accounts and a large amount of lost and unclaimed superannuation. To address this, trustees and employers will be able to check information about their members and employees with the Commissioner to ensure it matches the information held by the Commissioner.

6.13 There are also large numbers of accounts in the system without tax file numbers that will limit the effectiveness of other measures designed to reduce the number of unnecessary accounts in the superannuation system. To overcome this, the Commissioner will be able to provide a member's tax file number to a trustee in certain circumstances.

6.14 The Commissioner will provide the following services which have been identified as critical to the success of SuperStream:

•

a register to display the electronic identity details of certain superannuation entities and RSA providers; and

•

a validation service to ensure that the employee/member information recorded for superannuation purposes is accurate.

6.15 The Commissioner has general administration of compliance with the superannuation data and payment regulations and standards for employers. Without amendments, there is no ability for the Commissioner to request information from employers to determine their compliance.

Summary of new law

6.16 This Schedule enables:

•

the Commissioner to provide a register of information necessary to facilitate the transmission of information and payments electronically to superannuation entities and RSA providers;

•

the Commissioner to require information from an employer to determine whether applicable superannuation data and payment regulations and standards are being met;

•

the Commissioner to provide a member's tax file number that has been quoted to an eligible superannuation entity or RSA provider to any other eligible superannuation entity or RSA provider that the member has an account with but does not hold the member's tax file number;

•

trustees of eligible superannuation entities, regulated exempt public sector superannuation schemes and RSA providers to check the member's tax file number with the Commissioner to ensure accurate information is recorded within the superannuation system;

•

the Commissioner to issue a notice to a trustee or RSA provider stating whether the information was able to be validated or not;

•

employers to check an employee's tax file number with the Commissioner to ensure accurate information is recorded within the superannuation system;

•

the Commissioner to issue a notice to an employer stating whether the information was able to be validated or not; and

•

the Commissioner under Division 3A of the SIS Act of Division 4A of the RSA Act to receive information and give notices electronically.

Comparison of key features of new law and current law

Detailed explanation of new law

6.17 Data and payment regulations and standards relating to RSA providers means regulations made under section 45B of the RSA Act and standards issued by the Commissioner under that section. [Schedule 4, item 1, subsection 10(1) of the SIS Act and item 25, section 16 of the RSA Act]

6.18 An eligible superannuation entity means a regulated superannuation fund or an approved deposit fund. [Schedule 4, item 2, subsection 10(1) of the SIS Act]

6.19 Superannuation data and payment regulations and standards means regulations made under section 34K of the SIS Act and standards issued by the Commissioner under that section. [Schedule 4, item 3, subsection 10(1) and item 26, section 16 of the RSA Act]

6.20 Repeal existing heading 'Correction and rectification of information' and replace with 'Information' to reflect the broader intent of the new sections in Division 4. [Schedule 4, item 4 of the SIS Act and item 27 of the RSA Act]

6.21 Insert new Subdivision A 'Correction and Rectification of Information' as Division 4 is now split into two subdivisions. [Schedule 4, item 5 of the SIS Act and item 28 of the RSA Act]

Subdivision B - Register of information about certain superannuation funds and schemes

6.22 The intent of Subdivision B of the SIS Act and the RSA Act is to facilitate the electronic transmission of payments and the information associated with electronic payments between certain superannuation entities, RSA providers and employers by providing for a register of information to be kept by the Commissioner.

6.23 The Commissioner must keep a register of information about certain funds, schemes and RSA providers. The register is to be kept by electronic means. [Schedule 4, item 6, subsections 34Y(1) and (2) of the SIS Act and item 29, subsection 45Q(1) and (2) of the RSA Act]

6.24 This register will contain information about the electronic identity of certain funds, schemes and RSA providers. Superannuation entities, RSA providers and employers who must comply with the superannuation data and payment regulations and standards will be able to use the register to find and verify the information necessary to send contributions or roll-over data and payments electronically.

6.25 The term 'certain funds and schemes' has been used to acknowledge the register will contain information about eligible superannuation entities that are prescribed through the regulations and exempt public sector superannuation schemes.

6.26 The term 'certain RSAs' reflects that the register will contain information about RSA providers that are prescribed through regulations.

6.27 It should be noted that, although exempt public sector superannuation schemes cannot be required to provide information about their electronic identity, the intent is to allow the Commissioner to provide this information in the register if it is provided.

6.28 An electronic register will allow superannuation entities, RSA providers and employers to verify the information automatically, without the need for human intervention, adding to the efficiency of the superannuation system.

6.29 The register is not a legislative instrument within the meaning of section 5 of the Legislative Instruments Act 2003 . This subsection has been included to assist readers and to avoid any doubt. [Schedule 4, item 6, subsection 34Y(3) of the SIS Act and item 29, subsection 45Q(3) of the RSA Act]

6.30 The Commissioner may make the contents of the register available to eligible superannuation entities, RSA providers and employers that are required to comply with the superannuation data and payment regulations and standards. Contents of the register will also be made available to exempt public sector superannuation schemes. [Schedule 4, item 6, paragraphs34Y(4)(a) and (b) of the SIS Act and item 29, subsection 45Q(4) of the RSA Act]

6.31 It is envisaged that there may be instances when the register would not be made available to a certain superannuation entity by the Commissioner. For example, when inappropriate use of the register has occurred.

6.32 The register must contain the information given to the Commissioner by the superannuation entities and RSA providers prescribed by regulations. The term 'prescribed eligible superannuation entities' is used to highlight that the entities will be prescribed by regulations but limited to eligible superannuation entities. [Schedule 4, item 6, subsection 34Y(5) of the SIS Act and item 29, subsection 45Q(5) of the RSA Act]

6.33 The register may also contain information about the electronic identity of exempt public sector superannuation schemes when this information has been provided to the Commissioner. [Schedule 4, item 6, paragraphs 34Y(6)(a) and (b) of the SIS Act]

6.34 The Commissioner is to combine the register of information of RSA providers together with the register of superannuation entities kept under section 34Y of the SIS Act. This will result in the best outcome for the users of the register. [Schedule 4, item 29, subsection 45Q(6) of the RSA Act]

6.35 Regulations may be made that prescribe the eligible superannuation entities and RSA providers required to provide information to the Commissioner, the manner in which it is to be provided and the timeframe in which it is to be provided. [Schedule 4, item 6, subsection 34Z(1) of the SIS Actand item 29, subsection 45R(1) of the RSA Act]

6.36 The regulations will prescribe information such as:

•

bank details - to ensure a payment goes to the correct destination;

•

a digital service address - used to ensure that information can be sent to the correct destination; and

•

a unique superannuation identifier - used to identify the correct fund, or a segment of that fund.

6.37 Regulations will also prescribe that information to be contained in the register is to be provided to the Commissioner prior to the commencement of the superannuation data and payment standards (1 July 2013) to ensure the register is complete and ready to facilitate effective electronic superannuation transactions. [Schedule 4, item 7, paragraph 34Z(1)(c) of the SIS Act and item 30, paragraph 45R(1)(c) of the RSA Act]

6.38 However, regulations cannot prescribe a timeframe for the provision of information to the Commissioner that is before 1 March 2013. [Schedule 4, item 7 of the SIS Act and item 30 of the RSA Act]

6.39 The register is to be kept from 1 July 2013. [Schedule 4, item 7 of the SIS Act and item 30 of the RSA Act]

6.40 An offence of strict liability will apply where the provision of the prescribed information is not provided to the Commissioner in accordance with the regulations. The penalty for this contravention is 25 penalty units. [Schedule 4, item 6, subsection 34Z(3) of the SIS Act and item 29, subsection 45R(3) of the RSA Act]

6.41 In framing these offences, consideration was given to the principles contained in Report 6/2002 of the Senate Scrutiny of Bills Committee on the Application of Absolute and Strict Liability Offences in Commonwealth Legislation .

6.42 It is considered appropriate that a contravention of this provision be a strict liability offence as a requirement to prove 'intent' of a prescribed eligible superannuation entity or RSA provider to not comply with the provision of information would make the provisions difficult to enforce.

6.43 The underlying nature of these provisions is to benefit the members of superannuation entities and RSA providers by improving the efficiency of the superannuation system. It is vital that all prescribed eligible superannuation entities and RSA providers give this information to the Commissioner in a timely manner so that there is a complete and accurate register for other participants to use.

6.44 It is a reasonable expectation that prescribed eligible superannuation entities and RSA providers will have this information readily available as it will be a core operational requirement for the receipt of data and payments for contributions and roll-overs.

Division 2 - Monitoring

6.45 Powers and duties are conferred on the Commissioner in relation to contributing employers in Part 25 of the SIS Act, and Part 10 of the RSA Act. The powers and duties conferred on the Commissioner by Part 25 of the SIS Act in relation to contributing employers, are not limited by a new provision being inserted as part of the self-managed superannuation fund (SMSF) Auditor Registration at Chapter 1 of this explanatory memorandum. [Schedule 4, item 8, subsection 6(2AC) of the SIS Act and item 31, subsection (3)(2A) of the RSA Act]

6.46 A contributing employer is an employer who has dealings to which the superannuation data and payment regulations and standards apply. Generally speaking, this is an employer who makes superannuation contributions for an employee to a superannuation entity or RSA provider. [Schedule 4, item 9, subsection 10(1) of the SIS Act and item 32, section 16 of the RSA Act]

6.47 Repeal the heading and substitute Part 10 Monitoring and Investigation in the RSA Act. [Schedule 4, item 33 of the RSA Act]

6.48 The Commissioner will be given sufficient power to monitor employers' compliance with Part 3B of the SIS Act (superannuation data and payment regulations and standards). Divisions 3 to 6 and 8 of Part 25 of the SIS Act are not relevant to employers. [Schedule 4, item 10, subparagraph 253(aa) of the SIS Act]

6.49 The Commissioner will be given sufficient power to monitor employers' compliance with Part 4Aof the RSA Act (superannuation data and payment regulations and standards). [Schedule 4, item 34, subparagraph 91(a)(aa) of the RSA Act]

6.50 Amend note 3 to highlight that the note does not affect any powers and duties the Commissioner has under this Part in relation to contributing employers. [Schedule 4, item 11]

6.51 Repeal the heading and substitute Division 2 Monitoring in the RSA Act. [Schedule 4, item 35 of the RSA Act]

6.52 The Commissioner may require the production of books by a contributing employer to allow the Commissioner to determine compliance with the superannuation data and payment regulations and standards. A notice may be given to a contributing employer. [Schedule 4, item 12, subparagraph 255(1)(b), item 13, subparagraph 255(1)(c), item 14, subsection 255(1) and item 15, subsection 255(1) of the SIS Act and item 36, subparagraph93(1)(1A) of the RSA Act]

6.53 The Commissioner may require the books to be produced in the English language. [Schedule 4, item 37, subsection 93(2) of the RSA Act]

6.54 A person authorised by the Commissioner may access any premise at which the person has reason to believe records relating to the obligations of a contributing employer under Part 3B of the SIS Act or Part 4A of the RSA Act. The authorised person may only access the premises with consent. [Schedule 4, item 16, subsection 256(1) of the SIS Act and item 38, subsection 94 and item 40, paragraph 94(1)(a) of the RSA Act]

6.55 To ensure that the monitoring provisions of the superannuation data and payment regulations and standards within the SIS Act and RSA Act will apply to employers and are constitutional, a provision has been included that states that the incidental aspect of the corporations power contained in section 51(xx) of the Constitution applies. [Schedule 4, item 17, section 256A of the SIS Act and item 40, section 94A of the RSA Act]

6.56 The privilege against self-incrimination will be retained for contributing employers in relation to the monitoring provisions in Division 2 of the SIS Act and the RSA Act. [Schedule 4, item 18, subsection 287(5) of the SIS Act and item 41, subsection 117(5) of the RSA Act]

6.57 These amendments will not apply to employers until they are required to comply with the superannuation data and payment regulations and standards:

•

the application date for medium to large employers (employs 20 or more employees) on 1 July 2014 is 1 July 2014; and

•

the application date for small employers is 1 July 2015, unless regulations specify a day after this.

Division 3 - tax file numbers

6.58 New provisions within Division 3A of the SIS Act and the RSA Act, enable the Commissioner to provide a response to trustees and employers when a member or employee tax file number (TFN) is provided to the Commissioner for the purpose of validating whether or not the TFN matches the information provided. The Commissioner may also inform trustees of a member tax file number in certain circumstances.

6.59 One of the irritants in the superannuation system at present is the poor quality of information about members.

6.60 High quality member information, that is, information that incorporates tax file number (if provided) and personal details such as full name, date of birth and address, will ensure that contributions and roll-overs can be processed electronically, thereby removing the need for costly manual processing. High quality information will also reduce the number of unnecessary duplicate, lost and unclaimed superannuation accounts.

6.61 The source of member information held by superannuation entities is generally employers. The member's information provided by employers is used by trustees to establish new superannuation accounts or to credit payments to existing accounts. By enabling employers to check the personal information provided to them by their employees, employers can ensure that they are providing information to a trustee that is accurate, thereby reducing any need for costly manual rework.

6.62 The ability for trustees to check member information provided to them is essential. Poor quality of member information leads to inefficiencies in crediting superannuation contributions, unnecessary duplicate accounts as well as an increased risk that a person's superannuation can become lost or unclaimed.

6.63 With the introduction of these provisions, individuals will retain the right not to quote their tax file number for superannuation purposes. While these provisions do not override this right, they do enable employers and trustees to validate tax file numbers that have been quoted to them.

6.64 To facilitate improvements in the quality of information recorded in the superannuation system, an employer may use an employee's tax file number that has been quoted to him/her for the purpose of validating information about the person's identity with the information held by the Commissioner for that tax file number. [Schedule 4, item 19, subsections 299CA(1) and (2) of the SIS Act and item 42, subsections 133A(1) and (2) of the RSA Act]

6.65 The employee's tax file number can be used when it has been quoted for superannuation purposes or in connection with the operation of Division 3 of Part VA of the Income Tax Assessment Act 1936 (quotation of tax file numbers by recipients of eligible PAYG payments). It is intended that this would be done when an employer is going to register an employee with a superannuation fund, or make a contribution on their behalf.

6.66 This provision only applies to employee tax file numbers that are quoted to an employer after the commencement of this section.

6.67 A trustee or RSA provider is able to use a member's tax file number that has been quoted to him/her for the purpose of validating information about the person with the information held by the Commissioner for that tax file number. [Schedule 4, item 20, subsections 299LB(1) and (2) of the SIS Act and item 43, subsections 137B(1) and (2) of the RSA Act]

6.68 This provision will apply to member tax file numbers that are already held by the trustee or RSA provider as well as for tax file numbers quoted by a member after the commencement of this section. This will enable trustees or RSA provider to validate member information for accounts already established which will provide trustees with a significant opportunity to improve existing member information as well as new member information.

6.69 Amend the existing heading of Part 25A of the SIS Act and Division 4A of the SIS Act and substitute 'Commissioner of Taxation may issue notices about tax file numbers'. [Schedule 4, item 21 of the SIS Act and item 44 of the RSA Act]

6.70 Insert Commissioner of Taxation's full title. [Schedule 4, item 22 and item 23 of the SIS Act and item 45 and item 46 of the RSA Act]

6.71 The Commissioner will be able to provide a member's tax file number to a trustee of an eligible superannuation entity, regulated exempt public sector superannuation scheme or RSA provider that the member has an account with but who does not hold the member's tax file number, in circumstances where that tax file number has been quoted for superannuation purposes (within the meaning of the Income Tax Assessment Act 1997) to another person. [Schedule 4, item 24, subsection 299TC(1) of the SIS Act and item 47, subsection 143(C)(1) of the RSA Act]

6.72 This provision will enable tax file numbers that have been previously quoted by the member for superannuation purposes to be linked to other superannuation accounts held by the member. The linking of a tax file number to member accounts will significantly decrease the likelihood that their account will be duplicated, become lost or unclaimed superannuation.

6.73 References to 'quoted by the member for superannuation purposes' includes where a person is taken to have quoted their tax file number or has been deemed to have quoted their tax file number (Division 3 of Part 25A of the SIS Act).

6.74 If the person has specifically requested the trustee or RSA provider to not record their tax file number prior to the Commissioner giving the trustee or RSA provider a notice, the notice is to be disregarded and the person is not taken to have quoted his or her tax file number to the trustee or RSA provider. [Schedule 4, item 24, subsection 299TC(2) of the SIS Act and item 47, subsection 143(C)(2) of the RSA Act]

6.75 This is necessary to maintain an individual's right not to quote their tax file number to their superannuation fund.

6.76 Many Australians have multiple superannuation accounts. In many instances they have quoted their tax file number to one of their superannuation funds and not the others. It is estimated that approximately two million member accounts will benefit from this.

6.77 The Commissioner may give the trustee of an eligible superannuation entity or a regulated exempt public sector superannuation scheme or RSA provider a notice in the following circumstances:

•

the trustee or RSA provider gives the Commissioner the details they believe to be the person's full name, tax file number, date of birth and/or address;

•

the Commissioner is satisfied that the person is a beneficiary or an RSA holder or an applicant to become so. This could be achieved by asking a trustee or RSA provider to declare this as part of using the electronic service;

•

the Commissioner is satisfied that the trustee or RSA provider is giving the information to the Commissioner in connection with the operation of the entity or scheme. This could be achieved by asking a trustee or RSA provider to declare this as part of using the electronic service. The phrase "in connection with the operation of the entity or scheme" links the use of the service to superannuation data and payment matters; and

•

the Commissioner compares the information provided with the information the Commissioner has recorded for that tax file number and having undertaken a validation process outlined below is satisfied that a notice stating whether or not the information can be validated can be given. This is to reflect that there may be instances where the Commissioner is not satisfied that a notice can be given [Schedule 4, item 24, subsection 299TD(1) of the SIS Actand item 47, subsection 143D(1) of the RSA Act] .

6.78 The notice must state whether or not the Commissioner is able to validate the information given. [Schedule 4, item 24, subsection 299TD(2) of the SIS Actand item 47, subsection 143D(2) of the RSA Act]

6.79 To validate the information provided by the trustee or RSA provider, the Commissioner uses a complex matching algorithm, allocating a different weighting to each of the pieces of personal information, then derives a score. If the combination of the information matches a single record to a high degree of confidence, the Commissioner will advise the trustee that the information is validated.

6.80 If the combination of the information of does not match a single record to a high degree of confidence, the Commissioner will advise the trustee or RSA provider the information is not able to be validated.

6.81 If the Commissioner is unable to validate the information provided, the trustee or RSA provider can seek further information from the employer, or the member themselves to resolve the discrepancies.

6.82 If the Commissioner issues a notice to the trustee or RSA provider advising that the member information provided could not be validated, this is not to be taken to be a notice that the member tax file number quoted is invalid. [Schedule 4, item 24, subsection 299TD(3) of the SIS Act and item 47, subsection 143D(3) of the RSA Act]

6.83 The Commissioner may give an employer a notice in the following circumstances:

•

the employer gives the Commissioner the details he or she holds for an employee including the person's full name, tax file number, date of birth and/or address;

•

the Commissioner is satisfied that the person is an employee for whose benefit a contribution is to be made. This could be achieved by asking an employer to declare this as part of using the electronic service;

•

the Commissioner is satisfied that the employer is giving the information to the Commissioner in connection with the operation of the entity or scheme. This is to ensure that an employer uses the service as part of making a superannuation contribution or registering an employee for superannuation. This could be achieved by asking an employer to declare this as part of using the electronic service. The phrase 'in connection with the operation of the entity or scheme' links the use of the service to superannuation data and payment matters;

•

the Commissioner is satisfied that use by the employer of the tax file number complies with section 299CA of the SIS Act or 133A of the RSA Act. This could be achieved by asking an employer to declare this as part of using the electronic service; and

•

the Commissioner compares the information provided with the information the Commissioner has recorded for that tax file number and having undertaken a validation process outlined below is satisfied that a notice stating whether or not the information can be validated can be given [Schedule 4, item 24, subsection 299TE(1) of the SIS Actand item 47, subsection 143E(1) of the RSA Act] .

6.84 To validate the information provided by the employer, the Commissioner uses a complex matching algorithm, allocating a different weighting to each of the pieces of personal information, then derives a score. If the combination of the information matches a single record to a high degree of confidence, the Commissioner will advise the employer that the information is validated.

6.85 If the combination of the information of does not match a single record to a high degree of confidence, the Commissioner will advise the employer the information is not able to be validated.

6.86 A notice under this section is not a notice under subsection 202CE(3) of the Income Tax Assessment Act 1936 as that section relates to fax file numbers stated in a Tax File Number (TFN) Declaration. [Schedule 4, item 24, subsection 299TE(3) and item47, subsection 143E(3)]

6.87 If the Commissioner is unable to validate the information given, the employer can seek further information from the employee to resolve the discrepancies.

6.88 The Commissioner may provide an electronic interface to receive information and give a notice under this Division. [Schedule 4, item 25, section 299TF of the SIS Act and item 48, subsection 143F of the RSA Act]

Application and transitional provisions

6.89 Regulations made for the purpose of prescribing the information to be provided to the Commissioner relating to the electronic identity of prescribed eligible regulated entities cannot prescribe a time earlier than 1 March 2013 for the provision of this information.

6.90 The register of information relating to the electronic identity of prescribed eligible regulated entities is to be kept from 1 July 2013.

Consequential amendments

6.91 Part 3 of this schedule implements minor amendments relating to definitions.

6.92 Amendments to the SIS Act that introduced the superannuation data and payment standards stated that the standards were to apply broadly to superannuation entities. Superannuation entities include regulated superannuation funds, approved deposit funds and pooled superannuation trusts.

6.93 Upon further review of the scope of the superannuation data and payment standards it was agreed that the extension of compliance with the standards to pooled superannuation trusts is unnecessary.

6.94 As such, the definition of superannuation entities is to be repealed from SIS Act and replaced with eligible superannuation entity. An eligible superannuation entity includes regulated superannuation funds and approved deposit funds. [Schedule 4, item 54, section 34H(1) and (2); item 55, paragraphs 34K(1)(a) and (b); item 56, subsection 34K(2); item 57, paragraphs 34K(3)(a) and (b); item 58, subsection 34K(4); item 59, subparagraphs 34K(5)(a)(i) and ( ii), item 60, 34K(5)(b); item 61, section 34M (heading); item 62, subsection 34M(1); item 63, subsection 34M(1); item 64, subsection 34N(1); item 65, section 34P (heading); item 66, subsection 34P(1); item 67, subsection 34P(1); item 68, paragraph 34P(2)(a); item 69, subsection 34P(3); item 70, subsection 34P(4); item 71, subsections 34P(6), (8) and (9); item 72, section 299W (definition) of the SIS Act ; item 73, paragraph 20(1)(a) of the Superannuation Legislation Amendment (Stronger Super) Act 2012]

6.95 The definition of superannuation entity is to be repealed and replaced by eligible superannuation entity in the Taxation Administration Act 1953 (TAA 1953 ). [Schedule 4, item 74, subsection 288-110(1) in schedule 1 (heading) of the TAA 1953]

6.96 Within the Retirements Savings Account Act , the existing definition of eligible superannuation entity is to be repealed and replaced to ensure that the definition of eligible superannuation entity in the SIS Act. [Schedule 4, item 53, subsection 16(definition) of the RSA Act]

6.97 Within the Income Tax Assessment Act 1936 (ITAA 1936), the existing definitions of eligible superannuation entity and regulated exempt public sector superannuation scheme are to be repealed and replaced to ensure that the definition of eligible superannuation entity in the SIS Act [Schedule 4, item 48, subsection 202DH(2); item 49, subsection 202DJ(2) of the ITAA 1936]

6.98 The definition of eligible superannuation entity is to be inserted into the ITA Act 1936 and will have the same meaning as in the SIS Act. [Schedule 4, item 51, subsection 202DJ(2) of the ITAA 1936]

6.99 Additionally, definitions associated with retirement savings account holder, RSA and RSA provider are to be repealed as these terms are already defined for the purposes of the ITAA 1936. [Schedule 4, item 52, subsection 202DJ(2) of the ITAA 1936]

6.100 The definition of regulated exempt public sector superannuation scheme is to be inserted into the ITAA 1936 and will have the same meaning as in the SIS Act. [Schedule 4, item 53, subsection 202DJ(2) of the ITAA 1936]

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Improving efficiency and data quality in the superannuation system

6.101 Schedule 4 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

6.102 This Schedule amends the SIS Act and the RSA Act to improve the quality of information in the superannuation system, and facilitate fully effective e-commerce for superannuation.

6.103 The Commissioner will keep a register containing information provided by certain superannuation entities and RSA providers. The information contained on the register will enable superannuation entities, RSA providers and employers to transmit information and payments electronically.

6.104 The Commissioner may request information from an employer for the purpose of determining the employer's compliance with the superannuation data and payment regulations and standards. The Commissioner may also access the employer's premises for the purposes of inspecting records where the employer's consent has been received.

6.105 The Commissioner will be able to provide a tax file number that has been quoted by a member to a superannuation fund or RSA provider to other superannuation funds or RSA providers the member holds accounts with and who do not hold a record of the member's tax file number.

6.106 Trustees of eligible superannuation entities, regulated exempt public sector superannuation schemes and RSA providers may check the member's tax file number with the Commissioner for the purpose of ensuring accurate information is recorded within the superannuation system.

6.107 Employers may check the employee's tax file number with the Commissioner for the purpose of ensuring accurate information is recorded within the superannuation system.

Human rights implications

6.108 This Schedule engages the following human rights:

Presumption of Innocence

6.109 The strict liability offence in section 34Z of the SIS Act and 45R of the RSA Act will apply where a prescribed eligible superannuation entity or prescribed RSA provider fails to provide the Commissioner of Taxation with information to be prescribed in regulations. The information that will be prescribed in regulations includes bank details to receive payments through the banking system, a digital service address to receive electronic messages and a unique superannuation identifier particular to the entity.

6.110 This information is standard as part of an eligible superannuation entity and RSA provider's administration and other superannuation entities will be relying on this information to send electronic payments and information associated with those payments electronically.

6.111 Electronic transactions between superannuation entities are being mandated from 1 July 2013, so this information is essential to enable other superannuation entities to comply with their obligations.

Privilege against self-incrimination

6.112 Item 15 ensures that for employers the privilege against self-incrimination applies in relation to the monitoring provisions in Division 2.

Protection from arbitrary or unlawful interference with privacy

6.113 The handling of TFN information is regulated by the binding Tax File Number Guidelines (2011 ), issued in section 17 of the Privacy Act 1988 .

6.114 An individual is not legally obliged to quote their TFN. Under section 299TC of the SIS Act, the Commissioner may disclose the member's TFN to a superannuation fund only when a member has quoted their TFN to another superannuation fund they have an account with. Many Australians have multiple superannuation accounts and through an oversight have not provided their TFN to all funds they hold accounts with. By linking a TFN to these member accounts, these accounts are less likely to become lost or unclaimed.

6.115 It is also important to protect an individual's right not to quote their TFN. There may be instances where an individual has made a conscious decision not to provide their tax file number to a trustee and provide it to other trustees. To maintain an individual's right not to quote, when an individual has advised the trustee of this intention, the legislation requires a trustee to not record the individual's TFN even if it is provided to the trustee.

6.116 Sections 299TD and 299TE of the SIS Act only apply when an individual has quoted their tax file number, to a trustee where they are a beneficiary of the scheme, or their employer.

6.117 By checking the information with the Commissioner it ensures accurate information is recorded in the superannuation system, reducing the probability that the individual's superannuation account will become lost or unclaimed.

6.118 An individual will retain the right not to quote their TFN by notifying their superannuation fund or RSA provider, and there are strong protections around the use of TFN's limiting the use of TFN's and penalties for inappropriate use in existing legislation.

Conclusion

6.119 This Schedule is compatible with human rights because the limitations it places on human rights are reasonable and proportionate.

Minister for Superannuation, the Hon Bill Shorten